The Virginia Green Car Buyer’s Blues

by Bill Tracy

Let me tell you a sad yarn about buying green cars in Virginia.

Due to a dead hybrid battery after 14 years and 192,000 miles, we recently traded in our classic 2006 Toyota Prius for a new Toyota RAV4 Hybrid LE, the cheapest green RAV4.

Had we lived in a different Blue state, we could have purchased the luxurious new RAV4 Prime Plug-In ($40,000 car), with heated seats and all of the fancy extras, cheaper (after taxes) than the $28,000 economy hybrid model, with no heated seats. How is this possible? Well, states like Colorado offer up to $5,000 plug-in vehicle rebate on top of the existing Federal $7,500 tax credit.  Furthermore, some states throw in generous additional benefits for plug-ins, such as free HOV/HOT lane use during the gridlocked rush-hour.

Virginia has no plug-in vehicle incentives yet, but per Jim Bacon’s recent article, that is on the agenda. The Old Dominion, however,  has a systemic problem in the new car showroom: high property taxes. Just ask former NFL star Michael Vick, who learned the hard way that the Virginia car tax is a progressive tax, especially punishing to newer cars, cleaner cars, and expensive cars.

Let’s take a close look at the green car math. Below I compare NoVA car costs to our neighbors in Washington, D.C. , which offers excise tax-free purchase of all green vehicles over 40 MPG EPA City. 
Firstly, let’s assume that I had purchased that fancy new, up-scale, Toyota RAV4 Prime Plug-in:

Plug-in Cost in NoVA: (eg; Alexandria with 5.3% annual car tax before “relief”)
$40,000   Toyota RAV4 Prime Plug-in
$  8,000  Sales Tax + Annual Car Tax (10-yr estimate)
– $7,500  Federal Subsidy (Tax credit)
– $       0  Virginia subsidy
$40,500 RAV4 Prime in NoVA

Plug-in Cost in Wash D.C.:
$ 40,000 Toyota RAV4 Prime Plug-in
$   2,800 D.C. Excise Tax (7% over 3500-lbs)
–$ 7,500 Federal Subsidy (Tax credit)
–$ 2,800 DC subsidy (tax free)
$32,500  RAV4 Prime in D.C.

In reality, we purchased the economic 2020 RAV4 Hybrid (math below). Hybrids (HEV’s) do not plug-in, instead they sip 100% gasoline as their only energy source. It is interesting to note that Washington, D.C., is the only state that still gives a tax credit for hybrids (if they are over 40 MPG EPA City).

Hybrid Cost in NoVA:
$28,000  Toyota RAV4 LE Hybrid
$ 5,000  Sales Tax + Annual Car Tax (10-yr estimate)
– $       0  Federal Subsidy
– $       0  Virginia subsidy
$33,000   RAV4 Hybrid in NoVA

Hybrid Cost in Wash, D.C.:

$ 28,000 Toyota RAV4 LE Hybrid
$   1,960 Excise Tax (7% over 3500-lbs)
–$        0 Federal Subsidy (Tax credit)
–$ 1,960 DC subsidy (tax free)
$ 28,000  RAV4 Hybrid in DC

Thus, had we lived in D.C., we could have bought the luxury RAV4 Prime plug-in more cheaply than some Virginians can get the non-plug RAV4 base models.

In many blue states, it’s a no-brainer to buy the top-of-the-line RAV4 Prime plug-in version, due to superlative state incentives. Residents of D.C. have a slightly more complex decision though, because D.C. discounts the HEV hybrid too.

Seems to me that Washington, D.C., sets a good example here. If we are truly interested in carbon-reduction (are we?), then fuel-efficient hybrids should be part of that equation. In this regard, honorable mention also goes to Arlington County, which historically offers a reasonable car tax discount for hybrids and plug-ins.

Overall, HEV hybrids face an uphill, if not a losing battle in America. Many blue states and utilities strongly favor Plug-ins over hybrids. Many red states are penalizing HEV hybrid owners with unfair extra taxes, making hybrid ownership financial non-sense in those states.

Virginia has an opportunity to lead on CO2 reduction by embracing hybrid cars as well as plug-ins. But the eco-success of any such Virginia CO2 reduction and incentive strategy probably necessitates car tax reform.

Bill Tracy, a retired engineer, lives in Northern Virginia.


Footnotes/Data Used:

(1) Toyota RAV4 Prime PlugIn- $40,[email protected] MPG City/94 MPGe (Weight 4,400-lbs)

(2) Toyota RAV4 LE Hybrid-  $28,[email protected] MPG City/40 MPG Combined (Weight 3,710-lbs)

(3) Toyota RAV4 LE Standard-  $26,[email protected] MPG City/30 MPG Combined (Weight 3,370-lbs)

(4)  Example NoVA Car Tax:  5.3% with 50% tax relief below $20k car value

(5)  Maryland’s plug-in financial incentives, historically similar in magnitude to DC,  have apparently expired as of June_2020 (free HOV is allowed).

(6) RAV4 Prime Plug-In features an 18-kwh Lithium battery allowing 42 all-electric miles

 

Abbreviations:

DMV= DC, Maryland, Virginia

HEV= Hybrid Electric Vehicle – 100% gasoline – Example: Toyota Prius

PHEV= Plug-In Hybrid Electric Vehicle – Gasoline and/or Electric – Example: RAV4 Prime

BEV= Battery Electric Vehicle-  100% electric –  Example: Tesla Model 3

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37 responses to “The Virginia Green Car Buyer’s Blues

  1. Don’t tax you, don’t tax me, tax that fellow behind the tree….

    Wasn’t Larry asking about rent seeking on the part of the environmental crowd? Here it is on full display….Tax based on actual fair market value? Oh, no, I’m virtuous so gimme a break. Thank you for making this woman’s point:

    https://www.baconsrebellion.com/wp/tci-taxing-the-poor-to-benefit-the-rich/

    ICYM, the General Assembly also took away another tax advantage. Since these vehicles buy little or no gasoline they pay little or no gas tax, now they pay extra for registration. See….that’s fair, that’s making sure everybody pays.

    • Thanks. You nailed that virtue signaling rent seeker.
      Let ’em eat cake.

    • AAAAAAA-MEN!

      This reminds me of the growing and increasingly plaintive wailing for “student loan forgiveness”, aka taking money away from my hardworking housepainter neighbor Rudy and his family to give to young people who made a poor but willing choice to mortgage their future.

    • Steve- I don’t know if you and I are having a failure to communicate these days, but I agree we should not be giving huge subsidies to expensive green cars. At the same time I feel Virginia’s tax structure tends to hurt green car buyers as well as all new car buyers.

      Plug-ins are alt fuel and should pay some extra to make up for pump taxes.

  2. Here we go…
    Government picking winners and losers..
    How about we stop subsidizing businesses and just let them compete in the open market….

  3. James Wyatt Whitehead V

    Dollar sixty four a gallon at Roy’s filling station on Chester street in front Royal. plug that in.

  4. Hey guys above, the subsidy train has already left the depot.

    The Federal tax credit of $7500 for plug-ins has been in force since about 2012 or earlier. Adding more state incentives on top of that is questionable way to allow plug-in advocates to buy luxury cars.

    Reforming Virginia’s car tax, I would recommend for all new car sales. That would give us a booming new car sales market in Virginia, like many other states enjoy. Almost all newer cars allow cleaner air than our clunker economy.

    As far as state green car subsidies, they should be modest (say 4% sales tax) and probably should only go to vehicles that do not already get humongous Federal tax credits. In my mind that should probably include qualifying HEV hybrids and maybe plug-ins that have lost their Federal tax credits (eg; GM/Tesla) due to sales over 200,000 .

    I do not favor expanded free HOV/HOT lane use for plug-ins.

  5. Well we know that rural Virginia will still favor pickups over sedans no matter whether the “plug in ” or not, right?

    I hear they are working on EV pickup trucks also though.

    The biggest tax expenditure – i.e. the govt picking winners and losers is employer-provided health insurance by the way.

    It makes the $7500 subsidy look downright puny.

    • “Well we know that rural Virginia will still favor pickups over sedans no matter whether the “plug in ” or not, right?”

      Well you can’t put an 8ft 2×4 into a Camry.

      Also, most of those new trucks that people can’t afford because of PPT get close to 30 mpg now a days, thanks technology.

      • “Well you can’t put an 8ft 2×4 into a Camry.”

        Wide load is greater than 8.5, so yes, yes you can. And, it’s been done. Keywords: rural Virginia

        • “Wide load is greater than 8.5, so yes, yes you can. And, it’s been done. Keywords: rural Virginia”

          Wide Loads require permits and approved routes, as a private citizen you aren’t getting one.

          How new, degrading people who are different than you.

          • Right. An 8ft 2×4 placed crosswise through the rear window is not a wide load, hence no permit required. Minimum lane width in Virginia, and found in rural mostly, is 10 ft.

            Degrading you, not new.

          • Again, against the Law. Anything protruding more than 4 inches from the side of your vehicle is a violation of Federal Law.

            “Nancy_Naive | November 24, 2020 at 2:32 pm |
            Right. An 8ft 2×4 placed crosswise through the rear window is not a wide load, hence no permit required. Minimum lane width in Virginia, and found in rural mostly, is 10 ft.

            Degrading you, not new.”

            Not really, you have a problem where you disparage anyone different than you.

          • “… as a private citizen you aren’t getting one.”

            Once again, you just “make it up”. If you’d like details, including why the Federal wide load limit was changed from “over 8 ft” to “over 8.5 ft”, I’ll give you a tip on how to find it. It’s because of a boat and a Congressman who owned one.

          • I was going to say that you’re unique so it happens to you often, but you’re not. Every animal has a Matt, especially horses.

          • “Again, against the Law. Anything protruding more than 4 inches from the side of your vehicle is a violation of Federal Law.”

            Define “side”. Western mirrors, for ex.

          • “Nancy_Naive | November 24, 2020 at 2:52 pm |
            “… as a private citizen you aren’t getting one.”

            Once again, you just “make it up”. If you’d like details, including why the Federal wide load limit was changed from “over 8 ft” to “over 8.5 ft”, I’ll give you a tip on how to find it. It’s because of a boat and a Congressman who owned one.”

            The only person making things up is yourself.

            There is a distinct difference between protruding in front of or behind, which is called out in the Federal Code (to which I can assume you don’t know).

            You cited the example of out both windows, that would exceed the 4 inch variance outlined in Federal Code (sorry you lost, yet again).

            Oh and the limit of width in Virginia is 8′ 6″

            https://www.dmv.virginia.gov/webdoc/pdf/dmv234.pdf

          • And you can get a permit online at the DMV, pay for it with a credit card, so you simply “made up” the “private citizen” part.

            Matt, you’re FOS.

            “Oh and the limit of width in Virginia is 8′ 6″”

            Oh, I see. I confused you with 8.5 ft.

          • “Nancy_Naive | November 24, 2020 at 2:56 pm |
            I was going to say that you’re unique so it happens to you often, but you’re not. Every animal has a Matt, especially horses.”

            That’s your opinion, it’s unfounded and poorly researched. However, I’ve come to expect that out of you.

            “Nancy_Naive | November 24, 2020 at 3:00 pm |
            “Again, against the Law. Anything protruding more than 4 inches from the side of your vehicle is a violation of Federal Law.”

            Define “side”. Western mirrors, for ex.”

            That’s not protruding from out of the windows, which is the situation you described and now are moving the goalposts regarding. I can only assume you’re moving those there goal posts, because you weren’t aware of the law.

          • You said “side”, not windows. If you’re gonna make up stuff, do a better job.

          • Nancy_Naive | November 24, 2020 at 3:08 pm |
            And you can get a permit online at the DMV, pay for it with a credit card, so you simply “made up” the “private citizen” part.

            Matt, you’re FOS.

            “Oh and the limit of width in Virginia is 8′ 6″”

            Oh, I see. I confused you with 8.5 ft.”

            Someone didn’t bother to read about hauling permits (shocked face).

            The only giant pile of excrement is you.

            Well considering it was a reply to this comment:

            “Nancy_Naive | November 24, 2020 at 2:32 pm |
            Right. An 8ft 2×4 placed crosswise through the rear window is not a wide load, hence no permit required. Minimum lane width in Virginia, and found in rural mostly, is 10 ft.

            Degrading you, not new.”

            I wasn’t aware that I need to clarify, after all you made the statement.

            I’m not making anything up, that’s you as per usual.

          • So, we’ve come full circle.

            Right, “no wide load permit needed”.

            Guess you could have laughed at the image, and not gone down your usual humorless, acid-filled rabbit hole. But noooo.

            I suppose there is a reason, you have my condolences.

          • Again, you were wrong.

            You cannot legally drive down any road in Virginia with an item exceeded 4 inches from the side of your vehicle (to exceed your mirrors, since I need to make clarifications on your comments now), even with a wide load permit.

            What’s to laugh about? You consistently disparaging those who aren’t like you.

            The only people in need of condolences are those who are forced to associate with you.

  6. I am curious Bill Tracey why you did not buy another Toyota Prius.

    • Good question Larry. Maybe we should have bought a new Prius. But we felt we wanted an older persons car, versus sitting lower, and also wanted a little bigger cargo space. We were originally planning to purchase the slightly larger Prius “v” hybrid wagon, but in 2018, Toyota stopped marketing the “v” in the USA, due to RAV4 Hybrid being so much more popular. I believe RAV4 is the best selling hybrid now, leaving a question if Prius has run its course in USA. Almost all Toyotas are available as hybrids now, so Prius becomes somewhat superfluous.

      Also important to us were the new Toyota safety features: auto stop, adaptive cruise control,. etc. , so that ruled out a used Prius v.

  7. It’s my recollection that only some hybrid owners get access to managed lanes for free. They bought hybrids years ago. The rest of them, including my wife who got her first hybrid in 2008, are SOL. But then, isn’t this the Virginia way – make some people special, while similarly situated ones are not?

    • Yes Virginia has a strange and complex HOV system of Clean Fuels license plates that you can keep forever, and if you have owned that license plate for a long time, you are grandfathered into the free-HOV benefits of long ago. Most states use stickers that expire in a certain time.

      This means that some “grandfathered” Virginia hybrid owners with Clean Fuels plates, still have free HOV benefits eg; on I66, if and only if, they have since bought a new plug-in car (because HEV hybrids are now kicked out of free HOV by Federal law).

      Currently Virginia’s HOT lanes do not allow free plug-in use, so the benefit is not as valuable anymore, but I66 commuters might find a use until completion of the HOT lanes there.

      Plug-in owners do still qualify for Virginia Clean Fuels plate Version#3, allowing free HOV, but the HOT lanes are wiping out free-HOV for most the highways that matter.

      • So for the moment, one reason we see some plug-ins in NoVA is that some hybrid owners had to buy them to continue their free HOV benefits ( on I66). A mini-incentive for a few grandfathered folks.

      • There is no reason to allow hybrids to ride free on managed lanes. Carpools and van pools – yes.

        • I agree with you, and of course Prius-type hybrids are now banned nationally from free HOV.

          “Plug-Ins” are still however allowed to use free HOV, if the state so desires. It turns out to be an important sales incentive in heavy traffic places like California and, Northern Virginia (not that I recommend it).

          Sadly seems to me COVID is probably killing off the car pool movement. We need to get an update on slugging status in NoVA. That possible plays into the hands of repurposing the HOV/HOT lanes as POV (plug-in only) lanes, and I can guarantee you that would stimulate plug-in sales out the roof per California.

  8. As Steve said, don’t tax you, don’t tax me, tax the fellow behind the tree. Subsidies are only bad theoretically or when someone else is getting them.
    Hybrid sales don’t hold up when the subsidies go away.

    • We have to decide if CO2 reduction/fuel savings is a valid goal. If it is, then increases in CAFE regs are needed. I do not really care how CAFE is achieved (aluminum body vs. hybrid) but I do not like the idea of keeping CAFE regs weak, bad allowing super-subsidies/mandates on electric cars as a crutch for CAFE credits. Which is how we are going.

  9. The conclusion that CAFE standards are weak is subjective. They are not free, so there is a trade-off between the level of the standard and the cost of new cars. As the cost of new cars increases, the turnover of older higher mileage cars decreases. If you look at the EIA data, CO2 emissions have been declining since the late 90s. It seems to me that we are doing well without taxpayers subsiding people who want to feel good by driving hybrids and BEVs.

    • Especially, when you hit new cars with a Personal Property Tax that’s equal to as many as 4 to 6 car loan payments in the 1st couple of years, and that disappears once the car gets, oh say, 10-years old. You can get a lot of mileage from a 10-year old car.

      The sticker shock for me and my two 2019 Subarus came in late April and late October. PPT – the gift that keeps on taking.

      South Park had it right. Old cars produce smog, EVs make smug.

      • Yes I agree PPT is keeping old more polluting cars alive in Virginia, and is highly discouraging to purchase of newer cleaner and greener cars. Additionally, following Virginia’s wayward lead* many red states have now imposed extra fees on HEV hybrids to discourage that purchase. It is not fair for red states to punish hybrids, that only use gasoline. If being more fuel efficient needs to be penalized, then the red states need to penalize all vehicles over 25 MPG and not kill hybrids per se. We need to be technology neutral and not pick scapegoats for punishment.

        * Virginia was the first state to penalize gasoline hybrids with an extra fee, but Gov McAuliffe stopped that new fee as his first act in office. Unfort red states have since run amok with the hybrid fee idea.

        Note that plug-in electric cars do deserve an added fee due to alt fuel escaping pump taxes. However, plug in advocates vehemently demand tax breaks for plug-ins, so that is the issue there.

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